When Should You Begin Taking Social Security?

June 14, 2018 - 5 minutes read

When should you begin taking social security?

Some Important Numbers to Consider

Whether you are approaching an age that allows you to apply for Social Security benefits or you are planning for the future, now is the time to consider the right option for you to initiate benefits. Here are some key numbers to know that will have an impact on your choices:

The Year You Were Born: It matters more than you might think.

The most important place to start this process is identifying what the Social Security Administration (SSA) calls your “full retirement age” (FRA).

  • If you were born in 1950 or earlier, congratulations! You have already reached that milestone.
  • If you were born in 1951-1954, you have or will be reaching that milestone soon – when you turn 66.
  • For those of you born in 1955-1959, it is when you turn 66, plus 2 months for each year from 1955-1959 (i.e. 1955 would be 66 plus 2 months, etc.).
  • For those of you born in 1960 or later, your FRA is 67.

Your age at the time you initiate benefits: It is not all the same.

You can actually initiate benefits prior to the time of your FRA, but it comes at a cost. You will receive a smaller percentage of your benefits than the 100% you would receive at FRA. Initiating benefits prior to the time of your FRA depends on more information and the details of your personal circumstances. More about that later in this post.

Percentage before FRA: The numbers get smaller.

Based on an example of your FRA being 66, you could choose to begin benefits as early as age 62; however, it would be at just 75% of full benefits and remain at that level. The percentage increases about 5-7% each year you delay filing until you reach 100% at FRA.

Percentage after FRA: The numbers get larger.

Did you know you could wait until several years after your FRA to initiate benefits – and that your percentage increases more each year you delay until age 70? The increase is 8% annually, until it reaches 132% at age 70, when it stops growing.

Life Expectancy: A Key Factor

Estimating life expectancy may not be one’s favorite exercise, but it may not be as difficult as it seems. If you are healthy, gainfully employed, and living an active lifestyle, you might feel comfortable delaying benefits and gaining the increased percentage as a result. If you have had some health challenges and are working less, or not at all, it may be worth considering filing either at FRA, or even earlier, depending on the complete details of your particular situation.

The information in this post is just the start. The decision process can be much more complicated for many people. The SSA knows that there are a lot of factors impacting the decision on when it is best to initiate benefits, so they provide materials, videos, and other information that are intended to provide guidance. However, that information can be complicated and, for some, confusing. In case you want to do some exploring, the below are some links that you may find helpful:

Social Security Administration Main Website

SSA Life Expectancy Calculator

SSA Benefits Calculator

Create Your Online SSA Account

The best idea is to meet with your financial advisor or tax preparer to review the details for you and your family. Objective insights usually prove very valuable, and thinking through the process before it is necessary allows for better decisions to be made. Price CPAs can help you evaluate when to start your social security benefits. If you would like to talk with one of our professionals about how to determine the best choices for you and your family, please contact us through our website (www.pricecpas.com), via email (info@pricecpas.com), or call us at 615-385-0686.

Jennifer Nipp, CPA
Price CPAs